Cosatu calls on government to retract its VAT hike

FINANCIAL RELIEF: The Independent Panel appointed to review the current list of items that are zero-rated for VAT purposes has finished its report.

CAPE TOWN - The value-added tax items panel report has been submitted to the National Treasury, however, the Congress of South African Trade Unions (Cosatu) said that it is "disappointed" that the report did not call on the government to retract its VAT hike.

In a statement, Cosatu parliamentary coordinator Matthew Parks first welcomed the additional "basic necessities" to the list of zero-rated items, but added that it was also disappointed.

Parks said: "The federation is disappointed but not surprised that the Panel did not call upon the government to rescind its VAT hike. COSATU maintains that the VAT hike was a slap in the face for the poor".

"It was tantamount to dumping the bill for looting by politicians, their families and friends to the poor. The real solution to the budgetary crisis is simply to stop the looting and wastage and recover our stolen taxpayers’ monies."

Among the items recommended to be zero-rated were white bread, sanitary pads, nappies and school uniforms.

The panel also cautioned government to ensure that benefits are not "captured" by producers.

Cosatu has called for the government to explain how it will ensure VAT exemptions result in price cuts for the products concerned.

"If not, then we face the risk that retailers will simply pocket the VAT exemptions and the poor will be ripped off once again," the statement read.

Cosatu also called for government to assist poor families with the ever-rising costs of school supplies.

"Government must provide these to all no-fee schools and to indigent learners at other schools and institutions of learning. Let us make the Freedom Charter a living reality and ensure that the doors of learning are really open for all", said Parks.

Cosatu said that if the government introduced a luxury VAT rate on luxury goods and increase corporate tax it good be put to good use.

"This alone would generate more than R20 billion in revenue for the government and could be used to fund job creation programmes", said Parks.